A model is provided whereby a monopolist firm chooses to price its product at zero. This outcome is shown to be driven by the assumption of `free disposal' alongside selection markets (where prices impact on a firm's costs). Free disposal creates a mass point of consumers whose utility from the...

The well-documented nonparticipation in the stock market by many households and the highly negative correlation between stock and housing investment are puzzling. We show that stock and housing markets are cointegrated, and thus households significantly increase housing expenditure, reduce stock...

We study an intertemporal consumption and portfolio choice problem under Knightian uncertainty in which agent's preferences exhibit local intertemporal substitution. We also allow for market frictions in the sense that the pricing functional is nonlinear. We prove existence and uniqueness of the...