Consider a world of traders separated in geographic, economic, or social space. Honest trade offers larger gains for more distant traders, but frequencies of meetings, and information flows about cheating, have local bias. Honesty is self-enforcing only between pairs of sufficiently close...

The authors develop a model of common agency with complete information and general preferences with nontransferable utility, and they prove that the principals' Nash equilibrium in truthful strategies implements an efficient action. The authors apply this theory to the construction of a positive...

A model of irreversible investment in a competitive industry under demand uncertainty is developed. In the absence of restrictions, investment by itself will keep the price from rising above a natural ceiling that exceeds the long-run average cost by an option value factor. When a lower ceiling...