This study investigates the capacity of hospitals to vary the intensity of their services based on patients' expected sources of payment. While the concept of price discrimination by hospitals based on payer generosity ("cost-shifting") has been discussed extensively, the notion that hospitals can adjust payer-specific marginal costs to reflect differences in reimbursement policies has not been...

In this paper we compare two mechanisms to regulate a monopoly: fixing a price for the good or service, or fixing the quantity to be produced. We consider an environment of asymmetric information in which the regulated firm has private information about the demand it faces or its costs. We completely characterize the optimal mechanism in both case and compare their performance. The problem is s...

Crime has high social costs. The criminal justice system is costly, imprisonments have negative effects on labor force participation, and the pain for victims is significant for most types of crime. Criminal behavior is related to marginal costs and marginal utility that go beyond deterrence and punishment. Economic theory suggests that some policies, for example improved labor market opportuni...

I examine how mergers affect performance in network industries. Network providers choose quality for communication within the provider’s own network, quality for communication between providers’ networks, and output. Cross-border mergers provide firms an incentive to increase output because merged firms internalize positive network externalities. Several results modify conclusions in the curren...

Soil erosion in developing countries is a widespread problem causing considerable economic damage. It still remains an intractable problem in many countries. Available research findings on costs of soil erosion indicate them to be high. Soil erosion continues to be a problem due to the difficulties of estimating the economic damages and attendant difficulties in developing effective control pol...

We analyse games of greenhouse gas emission reduction in which the emissions and the emission reduction costs of one country depend on other countries’ emission abatement. In an analytically tractable model, we show that international trade effects on costs and emissions can either increase or decrease incentives to reduce emissions and to cooperate on emission abatement; in some specifications...

Many countries have adopted or are considering incentive approaches to environmental regulation, such as tradable permit schemes to control pollution. Regulators influence the success of tradable permit programs by their choice of market rules and permit allocation mechanisms. This paper uses laboratory experiments to study how the transaction costs incurred by participants interact with the in...