In this paper we present a dynamic model of a firm which is deciding whether to outsource parts of its production to a less developed economy where wages and the level of technology are lower. Outsourcing reduces production costs but is associated with spillovers to foreign potential...

This paper studies the potential commitment value of cheap talk announcements in an agent-based dynamic extension of the Kydland-Prescott model. In every period, the policy maker makes a non-binding inflation announcement before setting the actual inflation rate. It updates its decisions using...

This paper analyzes behavior in repeatedly played two-stage games, where players choose actions in both stages according to best replies using level-n expectations about the opponent׳s actions in both stages. Level-n expectations are recursively defined in a way that a player holding level-n...

This paper investigates firms׳ optimal location choices explicitly accounting for the role of inwards and outwards knowledge spillovers in a dynamic Cournot oligopoly with firms that are heterogeneous in their ability to carry out cost-reducing R&D. Firms can either locate in an industrial...