In general equilibrium theory for private good economies, possible discontinuities in budget correspondences create obstacles to decentralizing Pareto efficient allocations, as well as to existence of Walrasian equilibrium with gains from trade. Then McKenzie's (1957) notion of compensated...

When analyzing migration policies, second best redistribution becomes a local public good subject to congestion. The remedial policy consists of a kind of second best finance for that good.

The Kyoto Protocol sets national quotas on CO2 emissions and allows international trade of these quotas. We argue that this trade is characterized by asymmetric, identity-dependent externalities, and show that bilateral trade may not be sufficient for an efficient allocation of emissions. We...

Our analysis yields some conclusions about the political role of regions in the formation of supranational economic areas, which turns out to be quite different from the role of nations. The claim that regions have more incentives than nations to attain a fiscal agreement implying full economic...