T single-product firms with different quality levels and fixed limited capacities engage in sequential price competition in an essentially deterministic model where customers have heterogeneous valuations for both products. We develop conditions under which the leader (she) can take strategic advantage of her limited capacity by pricing relatively low, purposefully creating shortages and leavin...

Focus is here on coalitional games among economic agents plagued by aggregate pollutions of diverse sorts. Defecting players presumably pollute more than others. Then, granted convex preferences and technologies, the core is proven nonempty. In fact, under natural assumptions, a specific, computable core solution comes in terms of shadow prices on the said aggregates. Such prices may, in large ...

For portfolio choice problems with proportional transaction costs, we discuss whether or not there exists a shadow price, i.e., a least favorable frictionless market extension leading to the same optimal strategy and utility. By means of an explicit counter-example, we show that shadow prices may fail to exist even in seemingly perfectly benign situations, i.e., for a log-investor trading in an...

Quality-Adjusted Life Years (QALYs) are the most widely-used measure of health in cost– effectiveness analysis and cost–benefit analysis. Within a welfarist framework QALYs are consistent with people’s preferences under stringent assumptions. Several authors have argued that QALYs are a valid measure of health within an extra-welfarist framework. This paper studies the applicability of QALYs wi...

Tradable permits are celebrated as a political instrument since they allow (i) firms to equalize marginal abatement costs through trade and (ii) the government to distribute the burden of the policy in a politically fair and feasible way. These two concerns, however, conflict in a dynamic setting. Anticipating that high-cost firms will receive more permits in the future, firms purchase excessiv...

This paper extends previous works that view transit systems as minimizing their after-subsidy costs. The paper uses the expense preference behavior model in economics and derives ®rst-order conditions for the manager. From the ®rst-order conditions, the paper formally shows that the decomposition of relative price ineciency between management behavior and subsidies found in the work of Sakano ...

This study investigates the water demand of Indian manufacturing plants. It adopts an input distance function approach and approximates it by a translog form. Duality between cost function and input distance function is exploited to retrieve information concerning substitutability and the shadow price of water. The model is estimated, using linear programming approach, on a sample of 92 firms o...

The value of environmental assets such as biodiversity, unique locations and the atmosphere may be hard to quantify. The implications of the irreversibility of decisions to destroy these has been the subject of extensive discussion. We analyze the value of such assets under conditions of uncertainty about future preferences, and show that this uncertainty will imply a conservation motive if it ...