It is feasible in some competitive equilibria with externalities to shift some externality costs among different agents in the economy. However, simply shifting costs will not, in general, result in efficient allocation decisions by all agents, since the magnitude of externality costs depends on...

Two kinds of models for a productive organization are presented. In the first, both production and rewards are based on the performance of individuals, which is perfectly observed. Their abilities are not observable. Despite this, theorems are proved giving strong grounds for the equality of...

Most analyses of equilibrium with imperfect information have assumed that individuals know the distribution of possibilities in the market. When individuals do not know the distribution, marginal cost pricing is not generally optimal. In a two-price example it is shown that individuals with...

This article examines the effects from introducing a "frictionless" legal system into a model of competitive equilibrium with externalities. In a traditional negligence-contributory negligence legal system, there are two important legal parameters under "due care" standards. This paper relates...

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We study the steady-state equilibrium of models where individuals meet pairwise in a costly stochastic search process and negotiate contracts to product output. Different meetings yield different outputs, and so an individual in a contract may wish to continue search to find a better match. If...

Pricing congested facilities above marginal production cost is a conventional approach to improving resource allocation. Where everyone is producing the same externality, a uniform price (in excess of marginal cost by the value of the externality) permits the competitive equilibrium to be Pareto...