We develop a theoretical model of long-run investment decisions on capacity in the context of a liberalized electricity … the level of capacity that maximizes social welfare, and compare it to a decentralized outcome. We show that in the … absence of any regulation, private investment decisions on capacity unambiguously lead to a socially sub-optimal outcome, and …

a model in which facilities can produce output at a privately known cost up to a previously-determined capacity level …. In such a model, the amount of slack in the firm is shown to be pro-cyclical. Indeed, as capacity constraints become … capacity. …

pecuniary benefits: higher prices lead to more integration. Because tariffs increase domestic product prices, this effect … trade-off between the pecuniary benefits of coordinating production decisions and the managers’ private benefits of … the predictions of our model, we obtain three main results. First, higher tariffs lead to higher levels of vertical …

protectionist policies in countries where workers will benefit from the imposition of tariffs and quotas. We test and confirm these …

produce a homogeneous output, production is subject to increasing returns to scale, and there is free entry and exit of firms …. The effects of differences in technology and endowments on the pattern of trade and welfare are examined. Import tariffs …