Current Department of Justice merger guidelines assume that merging the capacities of two firms will translate into an equivalent increase in market shares. Size matters. Economic theory asserts size is determined by marginal revenue and marginal cost not capacity. Size does not matter. In this...

The two central pricing rules contained in most antitrust laws are prohibitions of below-cost pricing and prohibitions of discriminatory pricing. This article shows that the rule against discriminatory pricing may actually induce firms to charge exclusionary below-cost prices, even in the...

I investigate an asymmetric duopoly where a public enterprise must supply the demand it faces, while a private enterprise has no such obligation. I show that such an asymmetric regulation yields the first-best outcome (Walrasian equilibrium).

Empirical demand analysis is usually conducted on the basis of either ‘regularity’ or ‘flexibility’. This paper takes a middle ground between ‘regularity’ and ‘flexibility’, offering a compromise in the form of a new specification termed ‘REDS’.

This paper identifies a new sufficient condition for a prudent agent to have positive precautionary saving in the presence of labor income and interest rate risks of any size. We also provide three economic interpretations for this condition focusing respectively on the marginal effect of saving...

Three types of demand functions are central to contemporary consumer theory: the Marshallian, the Hicksian, and the Frischian demand functions. This paper presents a systematic definition of the analytical relationships amongst these demand functions under the maintained hypothesis that the...

We introduce an augmented Becker–DeGroot–Marschak mechanism for the revelation of willingness-to-accept and willingness-to-pay in transaction cycles. The mechanism can be used to test for a behavioral anomaly.

We find for logit with income effects a function that generates choice probabilities via Roy’s identity. We show that it possesses all the properties to qualify as an indirect utility, it has a closed-form expression for the practically interesting translog specification of the systematic...

We show that in a unit demand discrete choice framework with at least three goods, demand cannot be additively separable in own price. This result sharpens the analogous result of Jaffe and Weyl (2010) in the case of linear demand and has implications for testing of the discrete choice...

A multiplicative form of the habit term in the utility function has some undesirable properties if the habit function is itself still additive (Wendner, 2003). A geometric form for the way the stock of habit accumulates can resolve these shortcomings.