In this paper, we present an implicit finite difference method for the numerical solution of Black–Scholes model American put options without dividend payments. We combine proposed by using a front-fixing approach where option price and early exercise boundary are computed simultaneously. study consistency prove stability fixing values free its first derivative. improve accuracy via mesh refine...

We study transactions that require investments before trading in a competitive market, when forward contracts fixing the transaction price are absent. We show that, despite the market being perfectly competitive and subject to arbitrarily little uncertainty, the inability to jointly determine investment levels and prices may make it impossible for buyers and sellers to predict the prices at whi...

We study transactions that require investments before trading in a competitive market, when forward contracts fixing the transaction price are absent. We show that, despite the market being perfectly competitive and subject to arbitrarily little uncertainty, the inability to jointly determine investment levels and prices may make it impossible for buyers and sellers to predict the prices at whi...

Laboratory methods are used to evaluate factors that affect the success of price-fixing conspiracies. In standard posted-offer markets with no discounts, sellers are able to approach joint-profit-maximizing prices when they are allowed to discuss their decisions in advance. But such discussions are not effective when sellers are allowed to offer secret discounts from their posted prices; transa...

To account for the illegal nature of price-fixing agreements, detection probabilities are introduced in a dynamic oligopoly. For a trigger strategy to sustain a non-cooperative collusive equilibrium as a SPNE both the discount rate and all per-period detection probabilities must be ‘low’. The domain reduces for which the strictest IC constraint is binding if (i) any per-period detection probabi...

Using a comprehensive dataset on the incidence of price-fixing across British manufacturing industries in the 1950s, I compare collusive and competitive industries and find evidence of a negative relationship between collusion and the labour productivity of larger firms relative to smaller firms. In particular, collusion is associated with a reduction or even a reversal of the productivity gap ...

A fixed exchange rate limits the ability of the real exchange rate to adjust to shocks, and tends to raise the volatility of real GDP. But adjustment may be enhanced if internal prices are more flexible under a fixed exchange rate. This paper develops a model in which price setters incur a cost to retain the option of ex-post price flexibility. The benefit of flexibility is increasing in the va...