This paper presents a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market. Introducing a minimum wage is desirable if the government values redistribution toward low wage workers. This result remains true in the presence of optimal nonlinear taxes and transfers. In that context, a minimum wage effectively rations low skilled labor which is subsidized by t...

In this paper, we study dynamic alliance formation among price setting agents in a competitive market. We look at n agents selling substitutable products competing (price) in a market. We propose a two-stage game: in Stage 1, agents form alliances (coalitions), and in Stage 2, coalitions set prices and compete against each other. Stage 2 is modelled as a noncooperative competitive game characte...

I am the Holbrook Working Professor of Economics at Stanford University, Research Associate at the National Bureau of Economic Research, and Principal of Market Design Inc. I am an expert on auctions, microeconomic theory, and industrial organization. I previously was the Castle Krob Career Development Associate Professor of Economics at the Massachusetts Institute of Technology, and I was a Sl...

We study competitive information provision in search markets. Consider the used car market: as a consumer searches, she receives noisy signals of the values of cars. She can consult an expert (say Carfax or a mechanic) to find out more about the true value before deciding whether to purchase a particular car or keep searching. Prior research has studied the pricing problem faced by a monopolist...

We show that frictions in labor and capital markets can be a source of competitive advantage for a¢ liates of corporate groups over standalone …rms in environments where bene…ts from internal markets’‡exibility are high. We argue that the advantage of ‡exibility in changing labor inputs is related to how di¢ cult it is to change capital inputs. We predict that if substituting labor with capital...

The general perception that laboratory markets yield efficient competitive outcomes seems to contradict the emphasis on market imperfections that pervades much of the theoretical work in industrial organization. This apparent contradiction is resolved by considering the effects of trading institutions: Competitive outcomes are indeed typical in laboratory markets where trading follows the "doub...

The Arrow-Debreu model of competitive markets has proven to be a remarkably rich and °exible foundation for studying an array of important economic problems, ranging from social security reform to the determinants of long-run growth. Central to the study of such questions are many of the extensions and modi ̄cations of the classic Arrow-Debreu framework that have been advanced over the last 40 y...